Aetna COBRA Updates per ARRA

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Jun 03, 2009

As you are aware, the American Recovery and Reinvestment Act of 2009 (ARRA) provides for a 65-percent subsidy on COBRA and COBRA-comparable state continuation premiums for certain assistance-eligible individuals (AEIs) for up to nine months. This results in significant changes in how plan sponsors administer their COBRA programs, and in the services Aetna offers to plan sponsors.

This article addresses:

The discontinuation of Aetna HMO COBRA Home Billing Services

Federal and state continuation requirements for our small group market

Discontinuing Aetna HMO COBRA Home Billing Services
As a result of the COBRA-related changes, Aetna will no longer be able to offer their HMO COBRA Home Billing service, effective May 1, 2009. This service provided COBRA eligibility maintenance and billing to Aetna's HMO customers upon request at no additional charge.

Employer Notification
Those employers who elected our COBRA Home Billing Service were notified of the discontinuation and provided the option for Aetna or the employer to administer those services. The mailings included a list of the names and address of customers and members currently being home billed if applicable.

Specific letters were distributed depending on the group size:

300+ group size

51-299 group size with Aetna COBRA brochure

20-50 group size with Aetna COBRA brochure

1-19 group size in the states where Aetna is required to administer state continuation* for the employer – States include AR, CA, FL, KS, KY, MD, MS, NE, NH, NV, OK, RI and VT.

1-19 group sizes in the states that have no continuation* – States include AK, AL, AZ, DE, ID, MI, MT and PA

Federal and State Continuation Requirements

Employers with 20 or more employees
Federal COBRA rules apply to group sizes over 20 employees. Employers are responsible for administering COBRA, although they may designate another organization (such as Aetna) to administer the program for them. Employers are responsible for funding the subsidy, and are reimbursed through a payroll tax credit.

Employers with less than 20 employees
Many states require continuation of group coverage for terminated employees for group sizes under 20 lives. The ARRA mandates the subsidy for these members as well, but requires carriers, such as Aetna, to fund the subsidy, and then be reimbursed through the carrier's payroll tax credit. In addition, 13 states require that the carrier handle the administration of state continuation, while 30 states require the employer to administer state continuation (the remaining balance of 8 states do not have state continuation).

Aetna is making the necessary process changes to enroll assistance-eligible individuals in state continuation, accept their 35-percent payments and administer the premium subsidy, where applicable.

State Continuation Employer Mailings
Mailings to group sizes under 20 employees to assure compliance with ARRA were distributed. One set of mailings was aimed at employers in 13 states where Aetna must administer the state continuation. Another set was aimed at employers in 30 states where the employer must administer the state continuation. In both cases, Aetna needs to record terminated employee names and addresses and is responsible for applying for the payroll tax credit for the ARRA subsidy.

States where the employer administers state continuation
In the following states, the employer is responsible for administering state continuation: CO, CT, GA, HI, IA, IL, IN, LA, MA, ME, MN, MO, NJ, NY, NM, NC, ND, OH, OR, SC, SD, TN, TX, UT, VA, WA, WV, WI, WY and DC. Aetna employers in these states received the following materials:

Employer letter explaining the subsidy

Instructions sheet requesting information

Employer Attestation-ARRA Employee Subsidy form

ARRA State Continuation Coverage Supplemental Notice for the employer to distribute to individuals on state continuation

States where Aetna administers state continuation
In the following states, Aetna administers state continuation: AR, CA, FL, KS, KY, MD, MS, NE, NH, NV, OK, RI and VT. Aetna employers in these states received the following materials:

Employer letter explaining the subsidy

Instructions sheet requesting information

Employee on State Continuation form

Employer Attestation-ARRA Employee Subsidy form

ARRA State Continuation Coverage Supplemental Notice for the employer to distribute to individuals on state continuation